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[This Document is the Property of His Britannic Majesty's Government.
CHINA RAILWAYS.
CONFIDENTIAL.
[33112]
No. 1.
[October 5.]
SECTION 3.
Sir J. Jordan to Sir Edward Grey-(Received October 5.)
(No. 405.) Sir,
Peking, August 20, 1907. IN continuation of my despatch No. 370 of the 7th August, regarding the Soochow - Ningpo Railway negotiations, I have the honour to report that Wang Ta-jên's reply to Mr. Hillier's Memorandum of the 6th instant was to the effect that the proposed conditions respecting the steps to be taken in case of default (Article 5), uniformity of construction with the Shanghae-Nanking Line (Article 6), the Chief Engineer and Chief Accountant (Article 7), and the inclusion of the preliminary survey expenses in the commutation to be paid to the Corporation (Article 8), should all be eliminated, since China was prepared to give an unconditional guarantee for the due payment of interest and principal of the loan.
At my next interview with the Ministers of the Wai-wu Pu, on the 13th August, I discussed the principle at stake with the Grand Secretary Na Tung and Mr. Wang Ta-hsieh. The point of view of the Corporation's representative, with which I fully concur, was that the time was not yet come for handing over to China foreign capital, borrowed for a specific purpose, without providing any safeguard for its proper adniinis- tration. I impressed upon their Excellencies that there was no desire to trespass on the Chinese rights of control. Mr. Hillier's proposal left them free to appoint whoever they wished as Chief Engineer and Chief Accountant, provided they were persons whom the Corporation could regard as trustworthy. The investing public looked to the Corpora- tion and the Bank issuing the loan to furnish them in the loan prospectus with conditions which assured a proper use of their money. With this end in view it was essential that the Corporation should be consulted in the appointment of the officials under whose hands the loan funds were to be expended. It was also essential that a reasonable check should be placed over the Chinese Managing Director, who, in the absence of such safeguard, might be called upon by higher authorities to apply the loan funds to other uses. I reminded their Excellencies of the condition of things prevailing in Szechuan and Kuangtung, where the native capital subscribed for railway construction was looked upon by the provincial authorities as a convenient fund upon which to draw when they stood in need of money.
The Grand Secretary Na replied by stating that, as far as he was concerned, he was prepared to admit the reasonableness of these arguments, and if the matter merely rested with him and Mr. Wang they would accept Mr. Hillier's Memorandum of conditions without further question. But it was quite a different matter to convince the gentry of Chekiang, who looked upon all such safeguards as encroachments upon China's sovereign rights," and he feared that Mr. Wang would not succeed in making them take any different view.
It was agreed, however, that he should endeavour to do so, and the interview terminated.
I have been unable to see Wang Ta-jên since that date, but, from information which I have received from him to-day, he has not succeeded in convincing the Chekiang representative that these points must be conceded, and he proposes in a meeting with Mr. Hillier, which has been fixed for Thursday, the 22nd August, to lay before him alternative proposals.
I have, &c. (Signed) J. N. JORDAN,
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